TTC News Archives-Trans Texas Corridor

Thursday, November 03, 2011

"Prior to Rick Perry, TxDOT had ZERO debt. Now it’s racked up over $31 billion."

Perry’s ‘Wall Street-ification’ of TxDOT

11/3/11

Terri HallExaminer.comCopyright 2011

Rick Perry and the GOP-dominated Texas Legislature are presiding over the most fundamental transformation of the Texas Department of Transportation (TxDOT) in its history. Gone are the days of Dewitt Greer, who led the Department in its glory days when it was lean, super-efficient, and projects were well-managed and cost effective. Greer was known for eschewing debt and nixing anything that wasn’t a good deal for the taxpayer.

Now, under Perry, he’s left professional certified engineers behind and chosen political hacks, bankers, and campaign donors to run TxDOT, recently installing Jeff Austin III, a banker, as a Transportation Commissioner and Phil Wilson, former Perry aide and lobbyist for an energy company who donated over $1 million to Perry through the Republican Governor’s Association, as the new Executive Director. Even before Wilson spent a single day on the job, Perry and the Legislature bumped-up his salary by $100,000 in a down economy when every other state agency has experienced cuts. Perry’s Transportation Commission just authorized Wilson to expand his executive officers up to five, bringing the total for annual salaries of the entire executive team to more than $1.5 million.

Why? Because Perry and the Legislature think they can run TxDOT like a private, Fortune 500 company, with their big six figure salaries, and more importantly, make it a major player in the Wall Street bankster club.They think charging motorists’ tolls are akin to a ‘user fee’ like the free market. Well, TxDOT’s ‘product’ isn’t like potato chips or an iPhone. It’s tasked with building and maintaining our PUBLIC highway system -- and public safety and efficiency, not private profits, should remain its primary mission.

We already know what happened to public safety under these new design-build ‘innovative financing’ contracts that are not competitively bid....ten pillars on the US 290 interchange had to be torn down and re-built. We already know what happened when Perry and the Legislature launched TxDOT headlong from a pay-as-you-go cash system into a complex matrix of debt instruments, it had a $1.1 billion ‘accounting error’ (counting bond proceeds twice). Prior to Perry, TxDOT had ZERO debt. Now it’s racked up over $31 billion.

Our public roads are monopolies where ‘free market’ principles don’t apply. Tolls aren’t true ‘user fees’ when boatloads of public money, like gas taxes, are used to build the road and then TxDOT or worse, a private corporation, charges taxpayers again to drive on it.

Efficiency has been replaced with a new layer of bureaucracy (Regional Mobility Authorities) and a massive network of inefficient toll projects, toll collection nightmares, and doing anything and everything to cover the debt propping-up unsustainable toll roads that aren’t financially viable. Public safety has been replaced with profit-driven initiatives like increasing speed limits to 80 MPH in order to drive more traffic to corporate-run toll roads (See Exhibit 7).

TxDOT has become putty in the hands of private interests at the expense of taxpayers and property rights. It’s not uncommon to see the likes of Goldman Sachs slithering around the Dewitt Greer building pimping its ‘innovative financing’ techniques while positioned to profit handsomely from them. After all, a trader finally said on BBC what we all know is true: “Goldman Sachs rules the world." Innovative financing simply put is building roads with a complex series of taxpayer-backed credit cards. These techniques include monetization of debt, multi-leveraged debt (using borrowed money to secure more borrowed money), ‘creative’ accounting and contracting, and public subsidies for private profits. The same sort of tricks that caused the financial collapse in Greece (and subsequently the Euro) and the sub-prime mortgage crisis in the United States.

Boy, does Texas need a new Dewitt Greer to recapture the highway department that once was the envy of the nation. But it’s clear by Perry’s recent appointments, that he has no intention of doing so. His cronyism is too ingrained for him to resist the temptation to steer billions in public road contracts to potential donors for his struggling presidential campaign. Not while he can have his cake and eat it, too -- to say he’s making TxDOT run more like a private company, while, in reality, he's hijacking the highway department and turning it into a tool to grease Wall Street bankers.

The downward spiral at TxDOT will continue as it clings to these ‘innovative financing’ tools that prime our public infrastructure for massive taxpayer bailouts. So much for Perry’s claim that he’s fiscally responsible and has balanced budgets. His Wall Street-ification of TxDOT will surely fail as it did with Fannie Mae, the housing crisis, and financial crisis in Europe. Rest assured, Perry and state lawmakers will tap Texas taxpayers to bail them out.

Tuesday, November 01, 2011

"Congress appears to be getting richer faster than the rest of the nation."

And Congress’ Rich Get RicherNet Worth of Lawmakers Up 25 Percent in Two Years, Analysis Demonstrates

Members of Congress such as Texas Rep. Michael McCaul reported major increases in their net worth, and Congress’ collective net worth also increased.11/1/11

By Paul Singer and Jennifer YachninRoll CallCopyright 2011

Members of Congress had a collective net worth of more than $2 billion in 2010, a nearly 25 percent increase over the 2008 total, according to a Roll Call analysis of Members' financial disclosure forms.

Nearly 90 percent of that increase is concentrated in the 50 richest Members of Congress.

Two years ago, Roll Call found that the minimum net worth of House Members was slightly more than $1 billion; Senators had a combined minimum worth of $651 million for a Congressional total of $1.65 billion. Roll Call calculates minimum net worth by adding the minimum values of all reported assets and subtracting the minimum values of all reported liabilities.

According to financial disclosure forms filed by Members of Congress this year, the minimum net worth in the House has jumped to $1.26 billion, and Senate net worth has climbed to at least $784 million, for a Congressional total of $2.04 billion.

These wealth totals vastly underestimate the actual net worth of Members of Congress because they are based on an accounting system that does not include homes and other non-income-generating property, which is likely to tally hundreds of millions of uncounted dollars. In addition, Roll Call's tally is based on the minimum values of assets reported by Members on their annual financial disclosure forms; the true values of those assets may be much higher.

While wealth overall is scattered fairly evenly between the two parties, there is an interesting divide in the two chambers. Democrats hold about 80 percent of the wealth in the Senate; Republicans control about 78 percent of the wealth in the House.

And as protesters around the country decry the supposed consolidation of wealth in America, the trend can be seen starkly in Congress, a comparison suggested by American Enterprise Institute visiting scholar Mark Perry. The 50 richest Members of Congress accounted for 78 percent of the net worth in the institution in 2008 ($1.29 billion of the $1.65 billion total); by 2010 the share of the 50 richest had risen to 80 percent ($1.63 billion of the $2.04 billion total). The pie of Congressional wealth got bigger, and the richest Members are getting a bigger slice.

But there is still plenty to go around. Overall, 219 Members of Congress reported having assets worth more than $1 million last year; subtracting the minimum value of their liabilities brings the total number of millionaires in Congress down to 196 — again not counting any value on their homes or other non-income-producing property. If one were to assume that every Member of Congress has $200,000 worth of equity in real estate, the total number of millionaires would rise to 220 Members, just more than 40 percent of the Congress.

As with the general U.S. population, a few exceedingly wealthy people skew the averages for the rest of the membership. But still, by almost any measure, the average Member of Congress is far wealthier than the average U.S. household.

For example, dividing the total wealth of Congress by the number of Members creates a mean (average) net worth for each Member of about $3.8 million (excluding non-income-producing property such as personal residences). By comparison, for the rest of the country, based on statistics released by the Federal Reserve, average household net worth is around $500,000 this year (including personal residences), according to David Rosnick, an economist at the Center for Economic and Policy Research.

But a handful of Members of Congress are worth tens or even hundreds of millions of dollars — the richest Member of Congress this year, Rep. Michael McCaul (R-Texas), is worth a minimum of $294 million, meaning that McCaul's own wealth has the effect of raising the average of every Member of Congress by about $500,000.

So a better number for comparison is the median, the number where half the group is above and half the group is below. For Congress, the median net worth in 2010 was about $513,000. For regular households, the Federal Reserve Board pegged that number at about $120,000 in 2008, and that number this year is probably around $100,000, Rosnick said.

While it is hard to make an exact comparison between Congress and the rest of the nation, what is clear is lawmakers "are all a lot richer than anything you would call a typical American," Rosnick said.

And Congress appears to be getting richer faster than the rest of the nation. Citing Federal Reserve data, Rosnick said, "From the end of 2008 to end of 2010, aggregate household worth increased12 percent." That is about half the increase Congress achieved during the same time period.

The cautionary note in any Congressional wealth analysis is that significant changes in apparent wealth of Members do not necessarily represent an actual change in net worth.

For example, Rep. Darrell Issa reported this year that his 2010 assets were worth at least $295 million, nearly double what they were the year before. The reason for the change appears to be in part because the California Republican moved some properties from a single account into separate accounts. An account that Issa had listed as having a minimum value of $50 million in 2009 dropped to a minimum value of $25 million in 2010, but he added 11 accounts with a minimum combined value of $38.2 million. Even if none of the actual account (or property) values increased, the minimum value of those assets on paper rises by $13.2 million, or more than 25 percent.

Alan Ziobrowski, a professor of real estate at Georgia State University, has produced studies of Congressional investment patterns indicating that lawmakers in both chambers tend to fare better in their investment portfolios than the average American, in part because "[t]here is no doubt in my mind that they are trading in some way on information that is there."

But he also points out that the Membership of Congress has turned over since 2008, making it difficult to compare wealth over time. "You've got different people," he said.

In the aftermath of the 2010 elections that swept Republicans to power, about 20 percent of the Members included in the 2010 survey were not included in the 2008 survey.

Last week, as I wrote, Perry rebooted his campaign. He brought in a bevy of veteran national strategists, released a tax plan and went on air with his first television ads. The tax plan was pretty well received. The ads were surprisingly positive for a guy whose modus operandi during his gubernatorial races was to go negative, and a smart move given that Perry’s problems lie not in how much Republicans love Mitt Romney–not much–but in finding a national political identity for himself. As the Washington Post’s Dan Balz wrote last week, voters perceive Perry as a bully – an image problem he needs to fix ASAP. And so, everyone watched to see if the new staff and approach would turn things around for Perry.

The early reviews aren’t good.

On Friday Perry traveled to New Hampshire to file his papers to be on the ballot in January. While there, he delivered a rambling and at times incoherent speech, which only fed the rumors that maybe Perry’s still on serious painkillers following major back surgery in July. The campaign says Perry’s off any pain medications and two weeks ago resumed his running workouts. But something was clearly off on Friday as Perry hemmed and hawed his way through the speech, at times gesticulating wilding, hooting and smirking at his own jokes and staring googly-eyed at a jar of maple syrup he was given, turning it upside down and watching the syrup ooze downwards, while exclaiming, “Awesome!”

Perry followed up his New Hampshire performance with an interview with Fox News Sunday. Host Chris Wallace grilled Perry on his new jobs plan and Perry didn’t seem to have any answers. For example, Wallace pressed Perry on his pledge to create 2.5 million jobs in his first term as President – an insignificant number, Wallace said, give that even Jimmy Carter created 10.5 million jobs in his four years.

WALLACE: But how do you answer this question. Two and half million doesn’t keep pace with the population growth. We would — our unemployment rate would increase under this goal?

PERRY: I don’t believe that for a minute. That is just absolutely false on its face. Americans will get back to work. Are we going to go out and make some, you know, claim and say, oh, it’s going to create 10.5 million jobs? We would be having the same conversation. Oh, that’s not realistic.

Perry’s staff said last week he may not participate in all of the remaining debates–perhaps a wise choice given his past performances. Perry’s strength is as a retail politician, and certainly that should be his focus moving forward. But the first voting begins in nine weeks. And without the platform of the debates – and, given Friday’s stemwinder, maybe Perry should lay off the high-profile speeches – it’s hard to imagine how and where Perry can go to turn things around. All that said, his top competitor for the anti-Romney slot, Herman Cain, is the only person in politics having a worse week than Perry. So, the Texas governor still has a shot, but only if he manages to avoid more “What was he thinking!?” moments.

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